Lagarde offers a lifeline
CHRISTINE Lagarde’s relationship with Brexit has been awkward at best. Her intervention on the Remain side, with the suggestion that leaving would be ‘pretty, to very bad for Britain’, will never be forgiven by hardline Brexiteers.
The passage of time, and the predicted plunge in British output failing to materialise, has led the International Monetary Fund’s managing director to take a much more sensible line.
She regards a hard Brexit as unimaginable. In particular, she believes such a jolt would be greatly damaging to ordinary people, Brits living on the Continent and for EU citizens who work and live here.
She also hints at the chaos in the skies, over landing rights, should there be a reversion to World Trade Organisation rules.
Lagarde’s intervention at a moment when the EU is still blocking trade talks ought to be politically helpful for Theresa May, as she battles with her Cabinet.
She wants to see rapid progress made on three issues: Britain’s exit payment, citizen rights and the border between Northern Ireland and the Republic.
But the Fund does not always win on Europe. The IMF’s desire to incorporate long-term deal restructuring into the rescue of Greece was strongly resisted in Frankfurt and Brussels.
It could well be one of the reasons why Brussels is flirting with the idea of turning the European Stability Mechanism (the EU’s rescue vehicle) into a more permanent European Monetary Fund, to rival the IMF itself. That is a development about which the IMF is less than enthusiastic.
With the world economy going great guns – Europe, Japan, the US and a large number of emerging markets are all expanding at the same time – Lagarde and the IMF want to avoid the stumbles that could be caused by Brexit and a breakdown of the North American Free Trade Association talks between the US, Canada and Mexico. Its other major fear is that leading central banks will take away the ‘punch bowl’ of low interest rates and printing money quickly, or communicate it badly.
If that were to happen then funds could soon start to flow from emerging markets back to the advanced economies, triggering a fresh crisis.
Keep the life jackets handy.
Flint’s task
SO THERE will continue to be a Flint at the top of HSBC.
Chairman Mark Tucker, the outsider brought in from Hong Kong-based AIA to rebuild HSBC’s reputation when he replaced Douglas Flint, has decided to follow a long tradition at the bank and reach inside for the next boss.
John Flint, the new chief executive, brings experience of having been part of the cleanup crew after the Mexican money-laundering operation, along with stints in global investment banking and at the retail bank.
In Tucker, the bank has a no-nonsense chairman known as a ruthless tackler of bad behaviour in finance and on the football field. Flint may be earning the big Hong Kong dollars but one cannot imagine Tucker taking much of a back seat.
The chairman is making it clear that HSBC will remain a British bank – Brexit or not. It employs 42,000 people in the UK and only a relatively small contingent, up to 2,000 or so, may head off to Paris.
HSBC has raised the possibility of moving headquarters from London on several occasions, and then decided to stay.
It can now make itself the leader in British finance. Its global operations in Hong Kong and Asia give it special access to markets that other UK players would like to reach as the country emerges from Brexit.
Instead of being grudging residents, Flint and Tucker must become enthusiasts at a moment when the Government should be focusing hard on keeping the City’s tax pounds safe, to help fund public services.
Ivanka’s world
THE World Bank’s desire for a capital increase, to support lending to developing nations, has fallen on deaf ears over at the US Treasury.
The US, as the bank’s biggest shareholder with a 17.5pc stake, has an effective veto.
Cannily, the bank’s president, Jim Yong Kim, is embracing America’s first family.
First daughter Ivanka Trump has been recruited to the cause of empowering women entrepreneurs and will appear on a panel with Kim at the weekend.
There may be no better way of reaching out to the White House.